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Here's what restricted fund tracking actually looks like in the books, not just in theory.
This is a class-tracked statement of activities from a real nonprofit close: program funds, management & general, and fundraising, each kept separate so a $20,000 restricted gift can never quietly cover something it wasn't meant for.
If your statements can't show this split clearly, that's usually a setup problem, not a staff problem.
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A client asked me last week: “I paid my insurance in full in October. Why is the whole amount not showing in my expenses?”
Fair question. Honestly, this is one of the most common things business owners ask me.
Here’s how I explained it. When you pay for a full year of insurance, the money leaves your bank on day one. But the insurance company protects you for 12 months, not one day. So you only use a small part of it at the start. The unused part isn’t an expense yet. It’s cover you have already paid for and still have.
Say you pay 24,000 on 1 October for a 12 month policy. Each month, 2,000 moves into expenses.
By 31 December, you have used 3 months:
Expense so far: 6,000
Still unused: 18,000
That 18,000 stays on the balance sheet as prepaid.
The client still wasn’t fully sure from the numbers alone, so I showed them year by year:
Year 1 (Oct to Dec): 6,000 used, 18,000 still prepaid
Year 2 (Jan to Sep): 18,000 used, 0 left
By the end of the policy, the full 24,000 has moved into expenses. Nothing is lost. It just moves a little each month, as you use the cover.
That’s when it clicked for them.
Rent paid in advance, software subscriptions, annual membership, visa fees and licence fees all work the same way. Pay now, use over time, expense a little each month.
If your bookkeeper says “prepaid” and you just nod, ask them for a schedule like this. It’s your money, you should be able to see where it is.
A designer asked me: “I only send invoices. Do I really need a bookkeeper?”
Fair question. Most designers think bookkeeping is only for big companies.
But the moment you take client money, you run a business.
Say you earned 60,000 this year. It feels like profit. Now look closer:
Income: 60,000
Software: 6,000
Equipment: 8,000
Contractors: 5,000
Fees: 3,000
Tax to set aside: 10,000
Real money left: 28,000
Without records, you think you have 60,000. You have less than half.
A bookkeeper helps you:
Track every invoice
Record every expense
Keep personal and business money apart
See your real profit each month
You focus on the design. We make sure the numbers behave.
This is part of my contra series, where I explain accounting without the jargon.
Most small businesses don’t run out of money because they’re unprofitable. They run out because they didn’t see the bad week coming. Payroll and tax land in the same week, three invoices are late, and the business suddenly has to scramble for cash.
So I designed Ledra, a cash-flow dashboard that looks ahead, not just back.
→ A cash health score with runway in months, not just a balance
→ A 4-week forecast that flags the crunch week before it arrives
→ Alerts with one-tap fixes: plan a transfer, chase late invoices, review a duplicate charge
→ Upcoming bills with approval status, so nothing is paid late or by surprise
What’s the one number you’d want on your finance dashboard every morning?
